Not every Shopify order is paid through Shopify Payments. Some customers pay with PayPal, some orders come in through Faire or Etsy, and some get marked as Manual by the store owner. Each of these payment methods is called a gateway, and each gateway holds your money for a while before sending it to your bank.
ConnectBooks keeps all of this organized with clearing accounts in QuickBooks. Think of a clearing account as a waiting room for your money: sales sit in it until the gateway deposits the funds into your bank. At any moment, its balance answers one simple question. How much money is this gateway still holding for me?
How it works
Setup: two steps, one time
Create a clearing account in QuickBooks for each gateway. One gateway, one clearing account. If you accept PayPal and also sell through Faire, create "PayPal Clearing" and "Faire Clearing." A Bank type account works best, since you will record transfers in and out of it.
Map each gateway in your ConnectBooks Shopify Store Settings. Navigate to stores and files, select the Shopify Store, click on accounting Settings and select the correct gateway for each active gateway listed there. This tells ConnectBooks where to post each gateway's sales.
What ConnectBooks does
Once a week, ConnectBooks posts all sales into the right clearing account for each gateway. Every entry includes its Shopify order number, so you can always match a clearing account to that gateway's own records, order by order.
What you do
Record deposits as transfers. While reconciling your main checking account in QuickBooks Banking Transactions, record each gateway deposit as a transfer from that gateway's clearing account.
Enter fees at month end. Most gateways charge processing fees. Enter them once a month. PayPal is the exception, since ConnectBooks imports PayPal fees for you.
The zero check
Once the deposits are transferred and the fees are entered, each clearing account should sit at exactly zero. If a balance remains, that is usually fine. It is simply money the gateway is still holding at month end.
Example: ConnectBooks posts $2,300 of Faire sales into the Faire clearing account. Faire deposits $2,185 into your checking account, which you record as a transfer. At month end you enter Faire's $115 in fees. The account lands at zero. Everything is accounted for.
The common gateways
Manual
Orders that the store owner or an administrator processes in Shopify and marks as Manual. Common reasons: the owner took merchandise, an order was given away, or the customer paid with cash or a check. (A dedicated Cash and Check gateway can also be created in Shopify.) You clear these out yourself, based on what each order actually was. There are usually no fees to record.
PayPal
The easiest one. PayPal is the only gateway where ConnectBooks imports the processing fees along with the sales. We recommend setting PayPal up as a real bank account in QuickBooks Online and reconciling it monthly, just like a checking account.
Faire, Etsy, and other channel apps
When the Faire channel or a similar app is connected to Shopify, ConnectBooks imports those sales into their own clearing accounts. You add the fees yourself, once at month end. When Faire deposits money into your checking account, recording that deposit as a transfer pulls the money out of the Faire clearing account and clears it.
Shopify Checking (Shopify Balance)
Some stores use a Shopify Balance account. Think of it as another checking account, with Shopify as the banker. Create a Shopify Checking account in QuickBooks, set Shopify Payments to post into it on your ConnectBooks settings page, and clear it out whenever you move money from Shopify Balance into your regular checking. Fees for Shopify paid orders are recorded properly. Treat it like any real checking account: reconcile it monthly, and you can link it in QBO Banking Transactions so its activity imports automatically.
In short: ConnectBooks puts every sale into the right waiting room, and you move the money out as it reaches your bank. When the waiting rooms hit zero, your books are clean.